Archive - 2014

After a customer went berserk 2 days ago over 40 cents, it appears the McDonalds Riots are contagious...

As a new year begins, it is easy to consider that the prospects for freedom in America and in many other parts of the world to seem dim. After all, government continues to grow bigger and more intrusive, along with tax burdens that siphon off vast amounts of private wealth. Extrapolating these trends out for the foreseeable future, it would seem that the chances for winning liberty are highly unlikely. There is only one problem with this pessimistic forecast: the future is unpredictable and apparent trends do change.

The fate of countries like Japan is really in the hands of central bankers. However, central planners are not able to manipulate markets infinitely. At a certain point, something has to give. That is when the markets will give up and disbelief will replace trust. In such a bust scenario, people flee down the Golden Pyramid of asset classes to their safe haven, being gold.

First, NYC's cops turned their back on Bill de Blasio, best known for first rushing to side with New York's "oppressed" minorities "threatened" by the local police, and then, when two weeks later 2 NYPD cops were executed in cold blood and in broad daylight in what some hinted was an unintended consequence of the mayor's bashing of the police, scrambling to undo his previous populism and to show his affection for New York's cops. Now, those tasked to protect and to serve the Big Apple, appear to have decided to turn their back on their job entirely, and in what is shaping up to be a long vendetta with the mayor, have succumbed to what the NY Post calls "a virtual work stoppage." This implicit strike by the NYPD is manifesting as follows: "traffic tickets and summonses for minor offenses have dropped off by a staggering 94 percent following the execution of two cops — as officers feel betrayed by the mayor and fear for their safety."

Having taught at The Angelo Patri Middle School - "a mostly black and latino middle school" in the Bronx - for several years, EAG News reports white male 7th grade math and science teacher Paugh William Shadow is suing New York City and the city's Department of Education claiming his race and gender made him a target for unfair treatment. The unlikely named Shadow claims he was denied the bathroom key for several years, was bullied, and "humiliated in front of his peers." The suit does not specify the damages Shadow is seeking.

With Steel output down 3.4% YoY (worst in over 2 years) and Cement output down 4% YoY (worst in 7 years) it should not be entirely surprising that the Final December HSBC Manufacturing PMI for China slumped to a contraction-implied 49.6 (a small blip up from the 49.5 preliminary print) and down from 50.0 in the previous month. This is the first contraction since April 2014 after the credit-impulse of Q2 comes back to bit in the hangover. New orders fell for the first time since April but the employment sub-index contracted again for the 14th months in a row. Market reaction is modest for now, China stocks lower and USDJPY fading.

Prisons employ and exploit the ideal worker. Prisoners do not receive benefits or pensions. They are not paid overtime. They are forbidden to organize and strike. They must show up on time. They are not paid for sick days or granted vacations. They cannot formally complain about working conditions or safety hazards. If they are disobedient, or attempt to protest their pitiful wages, they lose their jobs and can be sent to isolation cells. The roughly 1 million prisoners who work for corporations and government industries in the American prison system are models for what the corporate state expects us all to become. And corporations have no intention of permitting prison reforms that would reduce the size of their bonded workforce. In fact, they are seeking to replicate these conditions throughout the society.

How did the investment ideas we discussed throughout the year play out

Texans know all too well that relying too heavily on the oil industry can lead to trouble, and so, as Bloomberg reports, as crude prices tumble, landowners across Texas are accelerating production of a different kind of oil -- olive oil. "I can't look, it's depressing," mourns one Eagle Ford rancher over oil's demise, but "I love the trees," he brightens up as about 70 farmers across the state - up from 24 in 2008 - are hoping to cash in on America’s growing appetite for olive oil.

Wealth inequality isn't just a political issue - it's a survival issue. When a society hits a certain level of economic disparity, it is set on a path towards destruction. It happened to the Roman Empire, and it will happen to the United States.

The speculative fever in Chinese stocks has reached 11 on the Spinal Tap amplifier of euphoria. Last week saw a stunning 900,000 new stock trading accounts opened - the most since October 2007 (right before the Shanghai Composite collapsed 70% in the following 9 months). With real estate prices floundering, everyone and their pet rabbit is piling into Chinese stocks, as one 'investor' explained to The NY Times, "almost everyone I know is investing, so I think I should be investing, too."

"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society."

The worldwide economic and industrial boom since the early 1990s was not indicative of sublime human progress or the break-out of a newly energetic market capitalism on a global basis. Instead, the approximate $50 trillion gain in the reported global GDP over the past two decades was an unhealthy and unsustainable economic deformation financed by a vast outpouring of fiat credit and false prices in the capital markets. In short, when the classical Austrians talked about “malinvestment” the pending disasters in the global steel and iron ore industries (and also mining equipment and other supplier industries) are what they had in mind.

It is becoming increasingly clear that just as the crude oil market is set for some violent times ahead as producers lock into the defection phase of the Prisoner's Dilemma and flood the market with supply in an attempt to crush the weakest competition, so the gold market is set for many upheavals, the first of which, however, may be what Goldcorp defined in a recent presentation slideshow as Peak Gold.